Don't you hate it when your wife ignores your specific "entreaties" that she not share inside information about your publicly-traded company with her brother, and gets herself sued by the SEC?

On January 13, 2005, the SEC filed this lawsuit against Patricia B. Rocklage, the wife of Scott M. Rocklage, Cubist Pharmaceuticals, Inc.'s former Chairman and CEO, and also against William M. Beaver, Patricia Rocklage's brother (the brother's best friend and neighbor also was sued).

In its complaint, the SEC alleges that

on December 31, 2001, Scott Rocklage informed Patricia B. Rocklage of the negative results of a clinical trial involving one of Cubist's most important products, Cidecin. The complaint also alleges that, unbeknownst to her husband, Ms. Rocklage had a pre-existing understanding with her brother whereby she would give him "a wink and a nod" if she ever became aware of any bad news about Cubist that might affect its stock price. According to the complaint, shortly after learning about the trial results, Ms. Rocklage told her husband that she intended to signal Beaver to sell his Cubist stock. The complaint states that Scott Rocklage urged his wife not to take this action. The complaint asserts that, notwithstanding her husband's entreaties, by no later than the morning of January 2, 2002, Ms. Rocklage provided "a wink and a nod" to Beaver, who, at approximately 10 a.m. that day, sold all 5,583 shares of Cubist stock that he owned or controlled. The complaint further contends that, after receiving the signal from his sister, Beaver tipped his best friend and neighbor, Jones, who proceeded to sell all 7,500 shares of Cubist stock that he owned on the morning of January 3, 2002. Following the post market close announcement of the trial results on January 16, 2002, Cubist's stock price dropped by 46%, from a closing price of $31.75 that day to a closing price of $17.02 on January 17, 2002. By selling when they did, Beaver and Jones avoided losses of $99,527 and $133,222, respectively.